Days after selling her tobacco stock and donating the proceeds to an anti-smoking program at UCSF, Dr. Susan Desmond-Hellmann, chancellor of the public medical school and hospital system, is facing new questions about her investments. This time it's about companies that sell prescription drugs and medical supplies.

"The potential conflict is that the official in charge of the institution could push plans and research that directly benefit her financially," said Doug Heller, executive director of Consumer Watchdog, a consumer rights group based in Santa Monica.

Heller emphasized that there is no evidence of impropriety. And Desmond-Hellmann said she will recuse herself from decisions that might benefit her.

"But the perception lingers" when the head of a medical institution has a vested interest in certain drugs or research, Heller said.

The question is more than academic because UCSF and other universities are increasingly forging research partnerships with private companies. For example, last month, the Merck pharmaceutical company announced it would sponsor cancer drug trials around the world, including at UCSF. Desmond-Hellmann owns more than $1 million of stock in that drug company.

Stocks worth millions

It's one of 10 medical or pharmaceutical companies in which the chancellor owns stocks collectively worth at least $6.1 million to $7.3 million, but potentially much more, according to the statement of economic interests she signed in August after joining UCSF.

"I am in full compliance with the rules and regulations that apply to employees of the state of California and the University of California," Desmond-Hellmann said in a written statement to The Chronicle. "As such, I disclose my economic interests as required and will disqualify myself from participating in decisions that may affect my personal economic interests."

Ethics experts say that is all the law requires.

"A conflict of interest doesn't occur until an official influences, participates in, or makes an official decision that impacts their economic interests," said Roman Porter, executive director of the state's Fair Political Practices Commission.

Bob Stern, who helped write the state's conflict-of-interest laws in 1974 as general counsel for the FPPC, said that because Desmond-Hellmann owns so much stock, "she should be consulting with an attorney on conflict laws."

That means handing all holdings to a manager who sells everything and starts a fresh portfolio without telling the client what's in it. California law allows public officials to stop recusing themselves from key decisions only after this process is done, said Heller of Consumer Watchdog. He said Desmond-Hellmann should consider a blind trust.

"The honor of being the chancellor of UCSF comes with the small burden of rearranging your finances to avoid conflict - for the sake of the institution and the public trust," he said.

State Sen. Leland Yee, D-San Francisco, said that even the appearance of conflict is a problem.

"The fact that she has holdings in these medical companies, you need to look at whether her support of that type of research at UCSF has been objective," said Yee, a frequent critic of UC.

Issues over tobacco

Desmond-Hellmann, a medical doctor, ran into trouble over her holdings last week when a New York Times reporter asked about her holdings in the Altria Group, parent company of tobacco giant Philip Morris.

When the chancellor joined UCSF in August, she owned between $100,000 and $1 million in Altria stock, described on the disclosure form as "tobacco."

The current form, signed March 30, described Altria as a "consumer staples" company, and the value of her Altria stock was listed as between $10,000 and $100,000.

In her statement to The Chronicle, Desmond-Hellmann said that as of Monday, she and her husband had "sold all holdings in companies whose primary business includes the sale/manufacture of alcohol, tobacco and firearms. We also have restricted the purchase of any future stocks in this category and will monitor our portfolio to ensure that it reflects our values."

Desmond-Hellmann donated $130,000 in proceeds from the tobacco stock to UCSF's Center for Tobacco Control Research & Education.

Created cancer drugs

Desmond-Hellman, 53, is perhaps the last person anyone would expect to back tobacco, which causes cancer and heart disease.

She arrived at UCSF from the biotechnology giant Genentech where, as president of product development, she helped develop such anti-cancer drugs as Herceptin, Avastin, Taxol, Rituxan and Tarceva.

At the same time, Desmond-Hellmann also had owned up to $1 million in McDonald's and up to $100,000 in Coca-Cola. Fast food and sugary drinks have been linked to obesity, which in turn is linked to higher risk of heart disease, diabetes, high blood pressure and cancer, says the National Institutes of Health.

These companies are gone from the current disclosure form, but she now lists more than $1 million in the soft drink company PepsiCo.

Chancellor's medical, drug stock holdings

Of the 132 companies in which UCSF Chancellor Susan Desmond-Hellmann owns stock, 10 are medical and pharmaceutical companies. The holdings are listed on Desmond-Hellmann's statement of economic interests, Form 700.